Often financial planners are asked questions like ‘where should I invest ?’, ‘How much should I invest ?’, ‘Does investing in gold still makes sense or is real estate the next big sector?’, ‘What should be my asset allocation  given my age and profile?’ and so on. However, there is no generic answer to any of them, because for each individual, depending on several factors, the answer could be different.It is like asking a doctor which medicine one should take without actually knowing what the illness is. A right portfolio mix is highly specific to each individual /family and has to be customized and not generalized. Here we will try to look at how one can go about choosing the right portfolio mix. Why should I invest?  Often people have a blank look when I ask this question as most people are not clear about the goals for which they should invest. Investing only for returns cannot be a single point agenda because your milestones will decide the amount of investment, the magnitude of risk that you can take and the volatility that you can bear. So the first step is to pen down your goals, why you need to invest and when do you need the money. The basic rule is that you can’t keep your investments in volatile assets when you are nearing your goals. Understand nature of assets  Understanding the behavior of an asset class is very crucial in asset allocation. They are broadly classified as follows:  Equity: Investing in equity is like investing in a business venture. It is volatile in the short term but in the long term it generally tends to beat inflation and in effect help us build wealth. However, this asset should be looked at from a long term perspective only, that is five years or more. Investing in this asset systematically makes a whole lot of difference in generating a better risk adjusted return and should be the preferred mode of investing.  Debt: These are assets which more or less give an assured return, like fixed deposits (FDs), recurring deposits (RDs) etc. However, not all debt products give a guarantee and depending upon the nature of the asset could be quite volatile as well. Debt is chosen for their stability and liquidity but they tend to generate returns below inflation in most of the cases and so too much exposure in this asset class can actually erode wealth in the long term.  Gold:  This seems to always retain its luster in India. However, if this asset is bought as a jewelry it comes with a huge emotional quotient and is generally not traded. Hence investments via the gold ETF route could be more productive. Gold is highly liquid and can help balance the portfolio. So it is important that the proportion should be maintained to a maximum of 5% in ones portfolio.  Real estate:  This is a completely non-regulated market and prices move as per the seller’s perspective of his property. It can give good appreciation but is extremely illiquid and the tax implications should be known before one invests in real estate.  Liquid money:  This is the money lying in savings account which is to be used for day to day expenses. Although highly liquid, it attracts very low interest rate. Combine assets with milestones   This is the most crucial step in the entire exercise and the services of a planner may come in handy in having a financial plan. The most important aspect of financial planning is that assets get linked with goals and money needs to be available readily to fund them once the milestones come close. A mismatch in the same can be harmful to the entire financial planning exercise. For example, a real estate is assigned to a child’s future education but when the goal comes close either the asset may not get a ready buyer or the amount needed falls short of the property value. In such cases there could be a distress sale and the customer might end up paying huge capital gains on the same. A right portfolio mix is indeed crucial for the well being of a financial plan but this has to be a well thought out plan keeping the final goals in mind. Else too much allocation to one asset class might give good returns but might also jeopardize the entire financial planning process. The writer is founder partner, MSVentures Financial Planners